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Service Tax query
in General Discussions
Is arbitration income of AOP subject to service tax. If yes under what section of Finance Act?
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    Service tax is not a tax on income. This is an indirect tax on certain specified services. The tax is charged by a service provider in bill raised against his customer. The tax is paid by the service provider to Government. It is to be seen whether the said arbitration income has added to value of a specified service provided to a customer. In this case, the customer will pay the enhanced service tax to the service provider, who will deposit the tax to Government.

    G. K. Ajmani Tax consultant
    http://gkajmani-mystraythoughts.blogspot.com/

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    Gulshan I know service tax is not chargeable on income but the value of service provided. Pls read it substance and not in form and reply dear.
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    Jayen wrote:
    [quote]Gulshan I know service tax is not chargeable on income but the value of service provided. Pls read it substance and not in form and reply dear.[/quote]

    I have replied. Has the arbitration income added the value of a specified service? If so the tax will be levied on the increased value consequent on the arbitration award. Otherwise, there is no service tax.

    G. K. Ajmani Tax consultant
    http://gkajmani-mystraythoughts.blogspot.com/

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    Gulshan I was reading the definition of Business Auxiliary services which is a kind of residuary section which brings all the undefined unspecified services into its purview. Can you put light in that context pls.
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    Business auxiliary Service is provided under Section 65(105) (zzb) Chap V of Finance Act 1994. This is not residuary section. If this were so, every service would be taxable. Every service is still not taxable. There is also another category called 'Business support Service". The entire definition can be found in a text book on Service tax. This may also be searched on the net. It is necessary to read the definition of the service as well as service provider carefully. Anything not given in the definition is not taxable.

    G. K. Ajmani Tax consultant
    http://gkajmani-mystraythoughts.blogspot.com/

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    As I stated earlier, Business auxiliary Service is not a 'miscellaneous' category so as to include the services not provided elsewhere. This is not 'residuary' service. Hence there are many services that are not yet taxable. Hence arbitration income as such not related to any specified service is not taxable.

    For definition of Business auxiliary service and related matters, please go through following link:

    http://www.servicetax.gov.in/st-profiles-business-auxiservice.htm

    G. K. Ajmani Tax consultant
    http://gkajmani-mystraythoughts.blogspot.com/

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